Lenders change timescales in requesting and retaining funds
In today’s economic climate, the majority of purchasers require a mortgage and a deposit to purchase a property. Many purchasers will use personal savings however; it is also becoming common for purchasers to receive a financial gift from a family member, called a “Gifted Deposit”.
Following the near collapse of the banking sector in 2008, both the United Kingdom and Scottish Governments have recognised the financial difficulties facing for first time buyers. In order to assist, the Governments have introduced a variety of schemes and incentives to help such as; the Shared Equity Scheme with the Scottish Government, the introduction of a Help to Buy ISAs and Forces Help to Buy.
What implications do the changes in timescales have?
Whilst the opportunities for purchasers have improved, the task for solicitors in collating funds from different sources is a logistical quagmire. For example, when purchasing a new build property a purchaser may finance this through a mortgage, savings, a Help to Buy ISA and shared equity funding from the Scottish Government. This situation is further compounded if there are two purchasers who both have separate Help to Buy ISA’s and separate savings.
In the example above, the task of organising all of the separate funding to arrive on time before settlement is not easy as each financial provider such as Lenders, the Scottish Government and the UK Government have their own requirements and timescales which need to be met before funds can be released to a solicitor for settlement.
Greater chances of delay
Whilst every effort is made to receive several sources of funding at the same time, sometimes delays can arise. The table below outlines various timescales by Lenders for requesting and retaining funds if a delay occurs. Whilst we can make every effort to correlate the different sources of funding we are nevertheless bound by the Lender’s strict requirements which are outlined in the table below;
|Lender||Requesting funds for settlement||Retaining funds timescale||Delayed Settlement||Extending Mortgage Offer|
|Royal Bank of Scotland||At least 7 working days.||24 hours.||New request required within 5 working days of the new date of settlement. Where the settlement date is less than 5 working days, the Lender is unable to guarantee that funds will be released and this will require chasing to ensure funds are released.||If settlement is likely to happen after the mortgage offer expires, we can contact the Lender to request for the mortgage offer to be extended. If the Lender does not extend the mortgage offer then the application will revert to offer stage.|
|National Westminster Bank||At least 7 working days.||24 hours.||New request required within 5 working days of the new date of settlement. Where the settlement date is less than 5 working days, the Lender is unable to guarantee that funds will be released and this will require chasing to ensure funds are released.||
If the mortgage expires before the new settlement date, we can contact the Lender to request for the mortgage offer to be extended.
An extension can only be assessed in the 2 weeks prior to expiry.
|Nationwide Building Society||
If funds are requested via BACS - at least 5 working days.
If funds are requested via CHAPS – at least 48 hours.
|Up to 7 working days.||If settlement is delayed the same timescales for requesting funds apply as before.||If settlement is likely to happen after the mortgage offer expires, then the Lender must be contacted.|
|Halifax and Bank of Scotland||At least 5 working days.||For as long as the client is happy to pay the interest.||If the client is unwilling to pay the interest, funds must be returned. Funds cannot be re-requested until 48 hours after funds have been returned.||If the mortgage is due to expire we must contact the mortgage adviser to attempt to get the offer extended; otherwise a new offer will need to be issued.|
|TSB Bank||At least 5 working days.||Maximum of 1 or 2 days.||Funds cannot be re-requested until 4 working days after funds have been returned.||If settlement is likely to happen after the mortgage offer expires, we are able to contact the Lender to request for the mortgage offer to be extended. If the Lender does not extend the mortgage offer then the application will revert to offer stage.|
|Barclays||At least 7 working days.||24-48 hours.||After 48 hours, interest will be charged from the day of funds release. Funds can only be re-requested at least 3 working days after the funds have been returned.||The mortgage offer expiry is irrelevant; funds can only be re-requested within 28 calendar days of the original funds release date.|
How can purchasers help avoid a delay?
Purchasers can help avoid delays by;
- Providing any information requested promptly for example, whether you are obtaining a gifted deposit, Help to Buy funding and advise your solicitor of any issues at an early stage.
- Keep in touch with your Lender and ask for regular updates on your mortgage offer.
- Keep your solicitor updated of any issues with your Lender.
If you have any questions or queries, please telephone our New Build Department on 0141 333 9688.